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Beaux Pilgrim
Reed Insurance

Homeowners: Replacement Cost or Actual Cash Value

January 16, 2021 Beaux Pilgrim

The purpose of insurance is to get you back into the position you were financially before a claim. The problem is, depending on the policy you have, you may be in for an unpleasant surprise.

Every policy pays claims in one of two ways. We call it “valuation”. Valuation refers to the method of payment that the policy will apply to how your claim.

Those methods are either: Replacement Cost or Actual Cash Value. Usually abbreviated or states ad RC or ACV.

Replacement Cost is the preferred option. Replacement cost means that the insurance company will pay you enough to repair, rebuild, or replace whatever the items was that was lost, damaged, or destroyed, regardless of age and wear and tear. A claim paid under this valuation method will not apply depreciation to a claim. Here is it in a nutshell, the policy will replace the old stuff with new stuff.

Actual Cash Value or ACV is another option commonly used. When ACV is the valuation method, a claim payment will be reduced due to age and wear and tear. Under this option, depreciation will be applied against the claim payment. In other words, the policy will replace old for old, but even then, it will likely not pay enough to rebuild, replace, or repair your stuff.

There are some occasions where Actual Cash Value may be the only option available, but those instances are rare.

If you see that your policy is an ACV policy, ask for another option. If you don’t feel like your agent is providing you with the best option for you, reach out to our office, we will be happy to review your coverages and your situation.

The important thing is that you discuss these options with your independent insurance agent and make sure you have an independent insurance agent who will educate you regarding your options.

Find out what is different about us today:

Text or call: 318-336-5202

Email reed@reedinsla.com

You can meet our team HERE

You can start a quote HERE

We’ll be glad to take a look at your insurance coverage in any of the states of Louisiana, Texas, Arkansas, and Mississippi.

Thank you,

Beaux Pilgrim, CEO

Beaux Pilgrim
Reed Insurance

Homeowners policy standard exclusions

December 23, 2020 Beaux Pilgrim

We’re going to talk about some standard exclusions that are under any personal property policy. The policies I am referring to are either a homeowner, a condo, a renter’s policy, or a dwelling policy. Any of those sorts of policies will have these standard exclusions included in them, and you need to be aware because, uh, not everybody is aware of these things.

One of them, and probably one of the biggest, especially if you live like in Louisiana, or a coastal town, or you live close to somebody of water, or a place that gets just a lot of rain. There are areas in Louisiana along the Mississippi River, also along the coast in Mississippi. There are places inside Texas close to different water bodies, Toledo Bend, other places like that. And then in Arkansas along the Arkansas River.

You know, there’s a chance that you have or possibilities to get flood damage. Flood is rising water, water that has gotten out of its banks or has inundated a certain area, usually more than three acres of land or more than one piece or property. This is what flood is.

Now all those policies that I mentioned, they all exclude it. The only way to get flood insurance, or flood coverage, is through a flood policy. Now there are a few, but a very few, policies out there that will offer flood coverage inside of it, but typically I would say probably 95% of the time, if not maybe 99% of the time, this is going to be excluded underneath your policy. So you need to take a look at flood coverage if you think you’re in one of those areas. Um, it is l- less expensive than you may think, um, anywhere from, you know, two to $400 typically, depending on the policy that you purchase, what the coverage needs are that you have, but- but just understand that, uh, you know, that is something that you need to get on a sep- separate policy. That is flood.

Another thing that is often excluded is going to be an earthquake. That’s going to be excluded, you can usually get that added as an endorsement, though. However, if your insurance company does not offer that, you can usually buy that on a standalone policy, and that’s gonna depend on where you live. Obviously, if you’re in an area that’s more prone to earthquakes, it’s more likely it’s going to be excluded, but you may be able to purchase it. Unfortunately, these usually have high deductibles, like a $10,000 deductible might be a smaller deductible. Keep that in mind, um, but if you have an earthquake, you know it’s probably going to be more of a catastrophe type of claim, meaning a large claim. Um, there are options out there. You can reach out to us, we have options for standalone earthquake policies, or we could look at your home policy and make sure that you do have earthquake coverage included in it.

The important thing is that you discuss these options with your independent insurance agent and make sure you have an independent insurance agent who will educate you regarding your options.

Find out what is different about us today:

Text or call: 318-336-5202

Email reed@reedinsla.com

You can meet our team HERE

You can start a quote HERE

We’ll be glad to take a look at your insurance coverage in any of the states of Louisiana, Texas, Arkansas, and Mississippi.

Thank you,

Beaux Pilgrim, CEO

Beaux Pilgrim
Reed Insurance

Homeowners vs Dwelling

December 17, 2020 Beaux Pilgrim

Homeowners or Dwelling policy, which do you have?

I want to talk to you just for a minute about homeowner insurance. We in the industry like to throw around many different terminologies and abbreviations to explain what we are selling to you. Unfortunately, those terms sometimes don’t mean a lot to you. So I’m just going to touch on that briefly and hopefully clear that up for you.

If you own your own home, I am referring to an actual house you live in, not something you rent even though it may be a house, apartment, or condo.
Then you’re going to be looking for a homeowner policy. We often refer to this as an HO3 or HO5.

You may have purchased either a homeowner policy or another policy type called a dwelling policy. Some of the common terms used to refer to a dwelling policy are DWG 1, DWG 3, DP 1, etc. Any of these can be used to insure your home, but you should be aware of some major differences between these.

A Homeowners Policy is a Package. While a Dwelling policy is not. The homeowner’s policy comes with predetermined limits determined by the amount of coverage selected for the dwelling amount. With a Dwelling policy, all coverages and limits must be individually selected and paid for.

It is kind of like going to a Mexican restaurant. You can either order from the “combo” menu and get several things together. Or you can order “a la carte” and order individual items that you want.

While the “a la carte” option may give the impression of being less expensive, it typically is not but is usually more costly.

Dwelling policies typically do not have additional enhancement options that you may want as well, such as:
*defense for liable and slander
*replacement cost on personal property
*back up of sewer and drains
*Identity theft

Depending on the circumstances, a dwelling policy may either be the best option or the only option. Dwelling policies are typically used for a home being rented to others, that is vacant, or is under renovations.

The important thing is that you discuss these options with your independent insurance agent and make sure you have an independent insurance agent who will educate you regarding your options.

Find out what is different about us today:

Text or call: 318-336-5202

Email reed@reedinsla.com

You can meet our team HERE

You can start a quote HERE

We’ll be glad to take a look at your insurance coverage in any of the states of Louisiana, Texas, Arkansas, and Mississippi.

Thank you,

Beaux Pilgrim, CEO

Beaux Pilgrim
Reed Insurance

Homeowners : 6 Coverage Parts

December 11, 2020 Beaux Pilgrim

There are Six Parts to a Homeowners Policy. Do you have the right amounts in the right parts?

There are 6 primary coverage sections to your home insurance policy. In another article, we talked about the six different basic types of policies. In this one, we’re going to talk about the different coverage parts. Understand, depending on the type of policy you have and what you have purchased, you may not have all of these, but for this conversation, we’re going to talk about a homeowner policy, and it will have all six of these different pieces to it.

The Six Coverage Parts:

Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property
Coverage D: Loss of Use
Coverage E: Liability
Coverage F: Medical Payments

Coverage A: Dwelling

The primary coverage part is your Dwelling or home limits. It is called Coverage A.

So coverage A is your dwelling. That’s the actual house itself. That’s the structure: including the wall, floor coverings, the ceiling, the appliances installed, such as your central heating and air conditioning system, all of that’s included inside that dwelling.

The Dwelling limit is used to set the maximum amount the insurance company will pay to repair or replace your home; it is also used as a rule to suggest limits for the other property coverages. The other property coverages will be a percentage of the dwelling limit unless you change them.

Copverage B: Other Structures

Coverage B is the next one that’s listed on your policy. The suggested limit is 10% of the Dwelling limit. For example. If you have $200,000 for your Dwelling Limits then you suggested Other Structures limit would be $20,000.

Exactly what are other structures? That’s going to be buildings other than the dwelling. Examples would be a shed, fence, satellite dish, gazebo, swimming pool, and etc.

The limits offered automatically is a suggested amount. Potentially you may need higher limits than what is suggested by the policy. If you believe you need more, ask for higher limits.

Coverage C: Personal Property

You may also refer to this as Contents Coverage, but that is a little misleading.

Think of it as in all of your personal property. This will include your clothes, furniture, televisions, electronics, collectibles, guns, tools, lawnmowers, outdoor toys for your children, food, etc.

Something to keep in mind, all homeowner policies have lower limits on items that could be described as either hard to replace or high theft items. Some of those items are guns, jewelry, silverware, stamps, and the like. If you have any of these, make sure your agent knows. Then they can acquire the proper insurance for you.

The automatically suggested amount is 50% of Coverage A. Keep in mind this is an automatically recommended amount that you can request to be increased or decreased.

Coverage D: Loss of Use

Loss of Use is a coverage that a lot of people don’t understand, and in the time of a claim, this coverage could save you from a financial disaster.

This part of the policy provides you with living expenses (money) if your home is not livable because of a covered claim. This is money, so “I don’t have to live temporarily with my in-laws while my home is being fixed” insurance.

This part of the policy will provide expense money for the following: rent, utilities, additional food costs, additional travel costs, and other additional expenses due to you being displaced while your home is being repaired.

Now, all of us have friends and family that would offer to have us stay with them if something bad happened, but do you really want to stay a month or longer with family or friends if you don’t have to?

The automatic suggest limit here is 20% of the Dwelling limit.

Coverage 3: Liability

We’re moving out of the property coverages and moving into what’s called the liability coverages. This is a third-part coverage. You are buying this part of the policy to protect you if you harm someone else or to their property.

This coverage will pay for bodily injury, medical bills, rehabilitation services, property damage repairs, and replacements for other people you are found to be liable for. This will also provide an attorney for you and legal defense in court.

Coverage F: Medical Payments

Medical payments coverage is the part of a home insurance policy that covers you if a guest is injured at your home, whether you’re to blame or not. Medical payments coverage is meant for small claims.

This is a no-fault coverage that’s included under your policy. Limits range from $1,000 – $10,000.

That’s the six different coverages that you can find inside of your homeowner policy. Under a homeowner’s policy, these come as a package with limits automatically suggested. Keep in mind that these are suggested limits that can be increased or decreased.

Find out what is different about us today:

Text or call: 318-336-5202

Email reed@reedinsla.com

You can meet our team HERE

You can start a quote HERE

We’ll be glad to take a look at your insurance coverage in any of the states of Louisiana, Texas, Arkansas, and Mississippi.

Thank you,

Beaux Pilgrim, CEO

Beaux Pilgrim
Reed Insurance

Homeowners : There are 6 basic types

November 26, 2020 Beaux Pilgrim

There are 6 different types of policies you can get on your home. Make sure you have the right one.

Depending on if you own a home, have an apartment that you rent, or have purchased a condo, you will need one of six different policy types. If you have the wrong one, you may not have the coverage you need or not be covered at all.

In the insurance industry, we sometimes refer to these different policies as either HO3 or DP1, or HO6. Frankly, these probably don’t mean a thing to you, so I will try to help you understand.

The Six basic types are:

HO-3, Homeowner
H0-4, Renters
H0-5, Homeowner (aka HO-3 + 15)
HO-6, Condominium
DP1 or DWG1 or Dwelling 1
DP3 or DWG3 or Dwelling 3

Usually, we use either an HO-3 or HO-5 when insuring your home, and you own the entire structure or house. These two policies are very similar, with the H05 being an enhanced H03. We refer to both of these as a Homeowners Policy.

Both of these are policies with coverages packaged together with many coverage limits being automatically recommended based on the limit on the Dwelling. We talk more in-depth here: 6 primary coverages included in homeowners policy.

Understand that the primary difference between an HO3 and HO5 will be what things can happen to your personal property, and it still is covered by insurance. We call these “things that can happen” perils. We talk about that more here: Open vs. Named Perils.

The HO5 uses what we call “Open Perils” when describing what perils your personal property is insured for. This may or may not be a point of alarm, as long as you understand the difference. We talk about it more in-depth here: Open vs. Named Perils. Of course, we are always happy to discuss this with you.

What if I rent?

If you rent, then you will be buying Renters Policy or an HO4. This policy is very similar to a homeowner policy except not having a Coverage A: Dwelling limit nor will probably have an Others Structures limit.

A Renters Policy is what you purchase if you are renting a house or apartment. The cost is usually very inexpensive and can often be bundled with your auto insurance for additional savings.

This policy’s primary purpose is to provide you with protection for your personal property, provide you with living expenses if you are displaced due to a claim, and protect you against claims brought against you for liability.

Your landlord is not responsible for these items; the best option is an HO6 Renters Policy.

I am a Condo Owner.

There is a special policy for Condo Owners called and HO6.

These policies are more similar to HO3 or HO5, except for how the Dwelling Limits are determined. Typically in a condo policy, this is set by condominium contact when you purchase the contract.

Depending on your policy and insurance company, the limit as specified by your condominium agreement may be listed on your policy as the Dwelling Limit, or it may be listed as something else such as Unit-Owners Additions and Alterations Increase Limits. It is very important that you share a copy of your condominium agreement with your agent so that they ensure you meet your contractual agreement and are adequately insured. Without the correct limit, you will become personally responsible for any shortage.

What if I either have a second home or rent a home to someone else?

In these situations, the most common policy types are Dwelling policies. There are several options here. Dwelling 1, 2, or 3, sometimes referred to as a DP1, DP2, or DP3.

The policy types’ essential differences are the list of things that can happen to your property and the insurance policy respond. The other is how a claim is paid. The most common options are either a Dwelling 1 or a Dwelling 3

Understand that a Dwelling 3 is broader or more robust than a Dwelling 1. Also, a Dwelling 3 usually uses Replacement Cost for the Dwelling, whereas a Dwelling 1 uses Actual Cash Value or Market Value.

A Dwelling 1 will most commonly be used for a much older home, a home under renovations, or a vacant home. A Dwelling 3 is often used when the previous situations are not present or are a second home.

Deductibles

All of these policies are subject to a property deductible. Most of our home policies have a flat deductible, such as $500 or $1,000. Unfortunately, many of our competitors have moved to using percentage deductibles and sometimes separate deductibles on wind, hail, named storms, or hurricanes that apply to all property-related losses.

Typical percentage deductibles I have seen from our competitors are 1/2%, 1,%, 2%, and sometimes even 5%. While these percentages seem low, you need to understand the impact they have on you. The percentage is a percent of Coverage A, which is your dwelling limit. Here is an example:

The home dwelling limit is $250,000
Wind and Hail deductible is 2%
Equated to a $5,000 deductible for a claim involving wind or hail

We have talked with many new customers that did not realize they had one of the percentage deductibles previously with our competitors. Please review your policy or send a copy to us as we will be glad to help you determine what your deductible is and then find you a better option.

Unfortunately, in Louisiana, Mississippi, and Texas, you may not have an option outside of a percentage deductible, especially if you live closer to the coast. As an independent insurance agency, we have many options that should offer a better choice than you have now.

That’s the six different primary types of policies. Depending on your situation, you will need a customized policy for your needs.

Below I have many options where you can find a better coverage solution for you today.

Find out what is different about us today:

Text or call: 318-336-5202

Email reed@reedinsla.com

You can meet our team HERE

You can start a quote HERE

We’ll be glad to take a look at your insurance coverage in any of the states of Louisiana, Texas, Arkansas, and Mississippi.

Thank you,

Beaux Pilgrim, CEO